Monday, 13 September 2010

We must stop bashing bankers if we are to regenerate the economy.

The response to the banking crisis, what to make of it. ‘It is all politics’ a London cabbie tells me. How right. What is more interesting is the meaning of this phrase. I have pondered over this for quite some time and have come to an obvious definition: 'When party interest starts to override national interest and invades choices and measures in Government'. The Conservative Party under Cameron is paralytically obsessed with image change to the degree that it is willing to become anything but anything resembling the Party in its most successful days in the 1980s and 1990s. Alas it is also abandoning tried and tested methods of economic stimulus.
The skill of managing image is to protect it whilst doing nasty things. However, by not being too good at doing that the coalition have thrown away a myriad of sensible policies that even smell slightly of Thatcherism. Therein goes the sensible policies of that period that restricted state intervention into the market, and finally incentivised large and small business. Whilst the papers (shame on them) obsess with £40 million given to the Chairman of Barclays (an absolute pittance in comparison to its annual turnover) Osborne has been bought by the leftish drivel of using the banking bonuses as a scapegoat for Labour’s economic mismanagement. Thus the new coalition, built on the desire for power over any integrity of political belief, now seeks to make all bank bonuses transparent. The treasury is preparing detailed legislation this week.

Yet what purpose this obvious public relations stunt is for is unclear, barring protecting the brand that is 'Cameron Tory'. Is the Conservative Party now trying to stimulate envy amongst the public through revealing high pay packages? What purpose does revealing private earnings serve? And why not stop with the banks, what about businesses that expand under the lure of bonuses and put at risk a large amount of employees? What is the consequence of impalatable bonuses (and is the impalatability merely based on quanta)? Does one have to give it to the Cameron Big Society project (Convenient initials ‘BS’)? As getting a bonus is a sign of commercial success, and commercial success if the driver of the British economy, the measure makes no sense. Taking a concrete position, would be to regulate certain areas of banking directly- a position that I would disagree with due to its ability to render British high risk banking products uncompetitive globally. This publicity stunt approach to the economy has got to stop, the state and not the Conservative Party must come first. Credit provided by the banks is the fuel of the economy. If we don’t incentivise risk in banking, then in simple terms, we won’t get growth and move out of the recession.

Abhijit P.G. Pandya
Copyright Birkenhead Society.

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